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Hospitals Charge Medicare ‘Wildly Different Amounts’

With President Barack Obama overhauling the U.S. health insurance system, discussions and debate over medical costs are growing — and newly released data for 3,300 hospitals from the federal Centers for Medicare and Medicaid Services (CMS) shows wide variations in charges from hospitals not only in the same region, but also the same city.

According to a report in The New York Times, a hopital in Saint Augustine, Fla., typically billed nearly $40,000 for minimally invasive gallbladder surgery, while a hospital less than 40 miles away in Orange Park, Fla., charged $91,000. And in Dallas, one hospital’s typical charge for treating simple pneumonia was $14,610, while another charged more than $38,000. 

Though Medicare doesn’t pay the amount a hospital charges — it uses a specific system to reimburse hospitals for treating specific conditions — many say that pricing for a treatment or surgery should be similar, no matter the place of treatment. 

On average, hospitals submitted bills to Medicare that were about three to five times what the agency typically pays to treat a condition, according to a New York Times analysis of the data. And variations between what hospitals charge may be even greater.

Jonathan Blum, the director of the agency’s Center for Medicare, said he couldn’t explain the reasons for that large difference.

But hospitals have reasons, citing that they’re either teaching hospitals or had treated sicker patients. 

And overall, hospitals have come under scrutiny for charges that are largely viewed as difficult to understand — even for experts.

The goal for CMS? “… To make this information more transparent,” Blum told The Times.